The idea of investing both for profit and social good has come a long way in the last few years, but the sector still has enormous potential to grow.
The idea of deploying capital not only to generate a profit but to create some social return–“impact investing”–has come a long way in the last few years. From benefit corporations to social impact bonds, we now have plenty of variations on the theme, but perhaps not as much progress as first appears.
For example, a recent report from the Global Impact Investment Network and JP Morgan said the world’s 125 leading impact investors will raise their commitments by 125% this year. And yet, there’s universal agreement in the sector, even among its biggest champions, that it’s nowhere near the force it could be.
Various recent reports and books have attempted to identify bottlenecks to further growth. The latest comes from an international task-force set up by the G8 group of leading industrial nations. Called the “Impact Investment Report”, it’s a comprehensive survey of the scene, combined with some detailed proposals for what needs to happen if impact investing is to gain steam. Here are a few ideas we picked out.
PUT A VALUE ON SOCIAL OUTCOMES
Social impact bonds pay a return to investors if a social goal is met–say, a reduction in the recidivism rate at a prison. The report argues that intermediaries would be more likely to organize investment rounds if the potential value of the improvement was more visible or quantifiable–say if keeping one person out of prison equals returning $50,000 to the taxpayer. “Greater transparency about the fiscal value of achieving specific social outcomes would help enormously, by showing social innovators where opportunities exist to do better,” the report says.
The U.K. government now publishes a “Unit Cost Database” covering 640 social issues, from education to crime. For example, a child taken into care costs taxpayers over $100,000 a year. So, investors now know they need to provide a solution that costs less than that. Such measurements would also allow non profit groups to put a value on the services they offer, and allow something like a market to develop.
The Latest on: Impact investing
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The Latest on: Impact investing
- VC Include Announces 2024 Cohort for Fellowship for Impact Fund I Managerson May 13, 2024 at 3:42 pm
VC Include (VCI), an organization committed to evolving the traditional investment industry by creating an inclusive ecosystem of LPs and GPs from diverse backgrounds, today announced the cohort for ...
- The Canadian Impact Investing Working Group issues calls for increasing impact investing with 18 recommendationson May 13, 2024 at 4:00 am
Some of the country's leading impact investors working as the Canadian Impact Investing Working Group are publishing today a report "Scaling Impact Investing in Canada Through Mobilizing Asset Owners" ...
- IMPACT Community Capital Names Luke Rottmann as Managing Director of Investor Relations and Capital Marketson May 13, 2024 at 3:39 am
"We are thrilled to welcome Luke to the IMPACT team," said Jeff Brenner, President and CEO of IMPACT Community Capital. "His proven track record of building strong investor relationships and driving ...
- VC Funding May Be Down, But Here’s How Impact-Focused Startups Can Score Bigon May 9, 2024 at 3:59 am
In these uncertain times, investors are placing greater emphasis on companies that offer tangible solutions to pressing societal and environmental issues. Eugene Krasicki of neobank Keytom shares key ...
- Impact Investing Should Be Hardon May 7, 2024 at 6:21 am
If it is to be done well, impact investing should be hard.
- Where Making an Impact is the Newson May 6, 2024 at 4:59 pm
an impact-investing platform that empowers people to fund solar projects with the potential to earn a return on their money. Equities News asked Forns to share her journey so far and how she ...
- The Rise Of Impact Investing: How Millennials Are Shaping Financeon May 6, 2024 at 4:30 am
With a surge in impact investing opportunities, traditional financial institutions will need to adapt and innovate to meet this demand.
- Geopolitical upheavals to impact investment strategieson May 5, 2024 at 11:24 am
The next few months are quite critical in forming a long-term investment strategy; especially with elections happening in India and United States; the geo-political unrest in the region and beyond; ...
- Help Clients Ease Into Impact Investing by Starting with Depositson May 2, 2024 at 1:51 pm
The impact investing market is expected to more than double over the next decade—and will coincide with the largest wealth transfer in history, empowering a new generation of impact-hungry investors.
- The elusive inflection point in impact investingon May 1, 2024 at 5:00 pm
In April, I attended the Ecosperity Conference in Singapore where participants in the impact investing roundtable were asked to deliberate on the state of impact investing. Among the various questions ...
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